Corning's dividend was steady at $0.05 until last year, when the dividend was raised 50% to $0.075 per quarter.

Immediate safetyTo understand how safe a dividend is, we use three crucial tools, the first of which is:

The interest coverage ratio, or the number of times interest is earned, which is calculated by earnings before interest and taxes, divided by interest expense. The interest coverage ratio measures a company's ability to pay the interest on its debt. A ratio less than 1.5 is questionable; a number less than 1 means the company is not bringing in enough money to cover its interest expenses.

At 19, Corning covers every $1 in interest expense with just over $19 in operating earnings.

SustainabilityThe other tools we use to evaluate the safety of a dividend are:

The EPS payout ratio, or dividends per share divided by earnings per share. The EPS payout ratio measures the percentage of earnings that go toward paying the dividend. A ratio greater than 80% is worrisome.

The FCF payout ratio, or dividends per share divided by free cash flow per share. Earnings alone don't always paint a complete picture of a business's health. The FCF payout ratio measures the percentage of free cash flow devoted to paying the dividend. Again, a ratio greater than 80% could be a red flag.

Source: S&P Capital IQ.

Corning's free cash flow payout ratio jumped with the financial crisis but had since come down. With the dividend increase, the free cash flow payout ratio jumped to 47%, but that's still a very reasonable payout ratio.

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